US grain exporters count the cost of Katrina

On Aug 30 US grain companies were assessing the extent of damage inflicted by Hurricane Katrina on their facilities at the Gulf coast, as export operations there remained suspended for a third day.

The United States, the world’s largest exporter of corn, soybeans and wheat, ships about 70% of the grains from ports at the now storm-battered Gulf, grain traders said.

US farm exports, including grains, cotton and soy, are forecast at a record $63.5 billion in fiscal 2006 starting Oct. 1, up from a revised $62 billion in the current fiscal year.

Bunge Ltd., the world’s processor of oilseeds such as soybeans, and leading corn processor and agribusiness company Archer Daniels Midland Co., said their facilities at the Gulf coast had suffered some minor damage.

“There was some damage but we won’t know the intensity of it until we get in there and look at it,” ADM spokeswoman Karla Miller told Reuters.

She said ADM had four grain elevators at the Gulf area. “Those four are down,” she said, adding that it was too early to say where the company would need to declare force majeure to protect itself financially against delay shipments.

Bunge spokeswoman Deb Seidel said its soybean processing plant at Destrehan, Louisiana, suffered only “cosmetic” damage but was not operable because there was no electricity or employees in the area. “People are not back yet.”

Lt. Rob Wyman, a spokesman for the US Coast Guard, said late on Aug. 29 a stretch of the Mississippi River from the Gulf coast north to Baton Rouge, Louisiana, had been closed.

Risk analysts estimated the storm would cost insurers $26 billion, the most in US history.

“We would expect lost export sales for companies like Archer Daniels Midland, and to a much lesser degree, Bunge,” wrote securities analyst Leonard Teitelbaum of Merrill Lynch in a note to clients. “It is too early to tell.”

The Port of New Orleans, which handles grain hauled down the Mississippi River by barges from production areas in the Midwest, remained closed, and telephones at its offices were not working on Aug. 30.

Grain analyst Dan Basse, president of Chicago-based research firm AgResource Company, said it could take between three and seven days for Gulf export operations to resume.

Basse also said he was not expecting any grain companies to declare force majeure. “I don’t think anybody wants to default on grain shipments. They can get it shipped off the PNW,” he said, referring to the Pacific Northwest export front.

“The grain business is different from the coffee business,” he said, alluding to the New York Board of Trade declaring force majeure for its certified coffee stocks warehoused at New Orleans port due to uncertainty about damage from Katrina.

An exporter based in Portland, Oregon, said there has not been any marked increase in grain shipments from the Pacific Northwest due to the closure of ports at the Gulf coast. (Reuters)